Disclaimer: This content is for educational purposes only, based on data as of 1 PM IST on March 13, 2025. This is not financial advice. Trading involves risks. Always do your own analysis and manage risk before trading.
Welcome to today’s F&O Insights newsletter! Whether you’re new to trading or building your skills, this newsletter breaks down Futures & Options (F&O) data to help you understand market sentiment. We’ll cover:
- Overall Stock Activity: What’s happening with key stocks based on Open Interest (OI) changes.
- High-activity options: Specific options showing unusual trading volume.
- How to use this data: Understand key concepts like Volume/OI Ratio.
Let’s dive in and make sense of the numbers!
Understanding Stock Activity Through OI Changes
First, let’s look at how traders are positioning themselves in select stocks. The table below shows price changes and shifts in Open Interest (OI)—the number of outstanding options contracts—for calls and puts.
| Underlying | Price | Change | Call OI Chg | Put OI Chg | Call Explanation | Put Explanation |
|---|---|---|---|---|---|---|
| BHARTIARTL | 1643.00 | 0.01% | -1016 | 438 | Short Covering | Long Buildup |
| ICICIBANK | 1255.15 | 0.88% | -212 | 1678 | Short Covering | Long Buildup |
| BAJFINANCE | 8403.85 | -0.95% | 4233 | 714 | Short Buildup | Short Buildup |
| INFY | 1576.30 | -0.91% | 7132 | 1933 | Short Buildup | Short Buildup |
| SBIN | 730.90 | 1.05% | 224 | 786 | Long Buildup | Long Buildup |
| HDFCBANK | 1710.85 | -0.05% | 1087 | -298 | Short Buildup | Long Unwinding |
| TCS | 3499.60 | -0.19% | 2683 | 741 | Short Buildup | Short Buildup |
| RELIANCE | 1255.70 | -0.09% | 1284 | 261 | Short Buildup | Short Buildup |
| ITC | 412.80 | 0.10% | -185 | -74 | Short Covering | Short Covering |
| HINDUNILVR | 2188.30 | -0.20% | 1305 | 356 | Short Buildup | Short Buildup |
What Do These Terms Mean?
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Long Buildup: OI increases, often accompanied by a price move in the expected direction—up for calls (bullish) or down for puts (bearish). This indicates that traders are actively purchasing options, anticipating movement in that direction. Example: SBIN’s calls and puts both show Long Buildup with a 1.05% gain—bullish bets across the board!
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Short Buildup: OI increases, but the price moves against the option buyers—down for calls (bearish) or up for puts (bullish). It often means traders are selling (writing) options. Example: INFY’s calls show Short Buildup with a 0.91% drop—call writers may expect limited upside.
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Short Covering: OI decreases, typically with a price rise (for calls) or fall (for puts). Short sellers are closing positions by buying back options, adding fuel to the price move. Example: ICICIBANK’s call OI fell (-212) with a 0.88% rise—bullish short covering.
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Long Unwinding: OI decreases, often with a price drop (for calls) or rise (for puts). Long holders are selling their options, signaling fading confidence. Example: HDFCBANK’s puts show Long Unwinding with a 0.05% drop—put buyers may be giving up.
Quick tip: These labels combine OI changes with price direction to hint at market sentiment. A stock can have different signals for calls and puts, reflecting mixed views or hedging!
Spotlight on high-activity options
Next, we zoom into specific options with high trading volume compared to their OI. This can highlight strikes where traders are active, often signaling key levels.
| Contract | Volume/OI Ratio | Explanation | VOLUME | OI | IV |
|---|---|---|---|---|---|
| BAJFINANCE 8900 CE 27 Mar 2025 | 3.25 | Long Buildup | 4568 | 1405 | 23.95 |
| BAJFINANCE 8600 CE 27 Mar 2025 | 3.18 | Long Buildup | 9544 | 2997 | 22.72 |
| BAJFINANCE 8500 CE 27 Mar 2025 | 3.02 | Long Buildup | 12300 | 4079 | 22.48 |
| BAJFINANCE 8500 PE 27 Mar 2025 | 2.95 | Long Buildup | 6000 | 2036 | 27.7 |
| ICICIBANK 1250 CE 27 Mar 2025 | 2.96 | Long Buildup | 5716 | 1929 | 15.91 |
| INFY 1560 PE 27 Mar 2025 | 2.77 | Long Buildup | 6153 | 2222 | 24.06 |
| INFY 1540 PE 27 Mar 2025 | 2.42 | Long Buildup | 4098 | 1695 | 24.77 |
| INFY 1580 PE 27 Mar 2025 | 2.37 | Long Buildup | 6658 | 2806 | 23.53 |
| ITC 415 CE 27 Mar 2025 | 2.34 | Long Buildup | 5235 | 2236 | 15.78 |
| RELIANCE 1260 PE 27 Mar 2025 | 2.68 | Long Buildup | 6325 | 2359 | 19.54 |
| TCS 3500 CE 27 Mar 2025 | 2.56 | Long Buildup | 7998 | 3126 | 18.67 |
How to understand Volume/OI Ratio
- What It Is: The Volume/OI Ratio compares today’s trading volume to existing OI. A high ratio means lots of new trades relative to open positions.
- What It Suggests:
- Above 2: Notable activity, possibly signaling interest in that strike as support/resistance.
- Above 5: Unusual activity, often tied to big expectations or event (e.g., BAJFINANCE’s 3.25 at 8900 CE).
- Low Ratio (Below 1): Less trading than OI, suggesting positions are being held or closed rather than new activity.
Why it matters: High ratios can point to “hot” strikes where traders expect action. For example, INFY’s 2.77 at 1560 PE suggests bearish bets or hedging.
Market trends and insights
Based on today’s data, here’s what’s brewing:
Banking Sector Resilience:
- ICICIBANK: Short Covering in calls (+0.88%) and Long Buildup at 1250 CE signal bullishness, though Put OI Chg (1,678) hints at caution.
- SBIN: Long Buildup in calls and puts with a 1.05% rise shows strong bullish interest.
- HDFCBANK: Flat price (-0.05%) with Short Buildup in calls and Long Unwinding in puts suggests mild bearishness.
IT Sector Pressure:
- INFY: Price down 0.91% with Short Buildup in calls and puts, plus Long Buildup in 1540-1580 PEs (IV ~24%), points to bearish sentiment and volatility.
- TCS: Slight drop (-0.19%) with Short Buildup and 3500 CE activity (2.56 ratio) suggests limited upside expectations.
Finance Uncertainty:
- BAJFINANCE: Down 0.95% with Short Buildup in calls/puts, but Long Buildup at 8500-8900 CE and 8500 PE hints at a range-bound view.
Mixed Signals Elsewhere:
- BHARTIARTL: Flat (0.01%) with Short Covering in calls and Long Buildup in puts—possible consolidation.
- RELIANCE: Minor dip (-0.09%) with Short Buildup and 1260 PE Long Buildup suggests bearish hedging.
Volatility Watch: INFY (IV ~24%) and BAJFINANCE (IV ~22-27%) show higher expected moves than ICICIBANK (15.91%) or ITC (15.78%).
Final Thoughts
Options data offers a peek into trader minds—OI shifts show positioning, and Volume/OI Ratios highlight action zones. SBIN’s bullish signals contrast with INFY’s bearish tilt, while BAJFINANCE hints at a standoff. Pair these clues with your charts for smarter trades.
Happy trading, and see you in the next edition!
Disclaimer: This content is for educational purposes only, based on data as of 1 PM IST on March 13, 2025. This is not financial advice. Trading involves risks. Always do your own analysis and manage risk before trading.